Mortgages were sold, often illegally, to people that had no chance of servicing them, creating a money virus that was then sliced, diced and distributed through the piping of the financial system.

Regulators not so keen on regulation sat idly by as leverage increased and the shonks took root. Ratings agencies, tasked with turning junk into jewels, were paid to maintain the charade. The sanctified "qants" worked the numbers, constantly reaffirming the safety of the bet, giving not a thought to systemic risk.

US house prices had never before simultaneously fallen across the country so why should they now? And anyway, wasn't this the free market, raw and unfettered, the ultimate self-correcting machine?

And if it did fail, there was Alan Greenspan, ready to lean on the money spigot. He had proved it time and again; no problem was beyond the cure of cheap money.

Why not leverage the family home to buy a new car? Why not underwrite all those CDO contracts? Why not concoct a Libor scam? Why not sell mortgages to unemployed single mothers and ex-cons? Hell, why not get ex-cons to actually sell the mortgages?

Then the trouble started.

Chance to reflect

To the residents of Madrid, Athens and Dublin the GFC remains all too tangible. But in Australia, where the GFC was but a pebble in a sprinter's shoe, we can afford to reflect.

The best way to avoid another GFC is to ensure banks can fail without infecting the entire system. That means making them smaller. Trouble is, 'too big to fail' banks are now even bigger.

According to APRA, in March 2008 the four biggest banks controlled 67 per cent of total bank assets. By December 2013 that figure had increased to 78.4 per cent.

In the United States in 1990, the five largest banks accounted for less than 10 per cent of total industry assets. Now they control 44 per cent.

According to US Attorney General Eric Holder bankers are also too big too jail because bringing "a criminal charge ... will have a negative impact on the national economy, perhaps even the world economy".

Only in the strange reality field of financial politics do we save the system by keeping the people that destroyed it in their jobs because if we didn't people might lose confidence.

Instead of time behind bars, bankers got free taxpayer money to recapitalise. They made so much that the enormous fines levied on them barely registered.

Everything's fine

HSBC consorted with terrorists and money launderers and was issued a $US1.9 billion fine, just over a month's profit. Since August 2012, JP Morgan has paid $US25 billion in fines, including $US13 billion for its part in mortgage selling scams that led to the crisis.

Individuals cross the line but shareholders carry the cost. Either way, the dumb public can't be allowed to believe that something criminal occurred. The financial system can only be strengthened by covering stuff up.

Capitalism supposedly rewards risk takers. In the years leading up to the crisis, bankers, taking risks with other people's money, were rewarded alright. Then, when it all blew up they were rewarded again, first by not going to jail and then from having their pockets filled with free money.

That they have managed to shift the burden of their mistakes onto taxpayers, have successfully watered down every attempt to restrict their activities, including Basel III and the Dodd-Frank Act, can only further their capacity for greed, stupidity and criminality.

Still, this isn't 2007. The banks have (largely) been recapitalised, corporate and consumer debt is lower and corporate profits higher than before the crisis. In a sense, we are working through the problem.

And yet the central issue remains. Before the crisis bankers hoped governments would rescue them; now they know they will.

Having learned also that regulators are weak, politicians and ratings agencies can be bought and that no matter their crime, a banker never goes to jail, the seeds of the next crisis are already being sown.

This article contains general investment advice only (under AFSL 282288).

John Addis is a Director of Intelligent Investor Share Advisor. You can unlock all of Share Advisor's stock research and buy recommendations by taking out a 15-day free membership.